Legal Memorandum: Retirement of Long-lived Assets in OK

Issue: What are the legal obligations for the retirement of long-lived assets for a public utility company in Oklahoma?

Area of Law: Environmental Law
Keywords: Public utility operators; Abandonment of a long-lived asset; Legal obligations
Jurisdiction: Oklahoma
Cited Cases: None
Cited Statutes: Okla. Admin. Code §§ 165:35-1-5, :45-3-5 (2006), § 165:20-5-21; Mustang, Okla., Code § 106-34 (2005); Oklahoma City, Okla., Code § 37-211 (2006); Shawnee, Okla., Code § 28-247 (2006); Tulsa, Okla., Code § 11:1218 (2006)
Date: 12/01/2008

Utilities are regulated by the Oklahoma Corporation Commission.  Neither a gas utility nor an electric utility may discontinue or abandon any segment of its jurisdictional distribution system except upon order of the Commission upon application, notice and hearing.  However, this provision does not apply to routine retirement or replacement of plant or equipment.  See Okla. Admin. Code §§ 165:35-1-5, :45-3-5 (2006).

With respect to gas pipelines, the Commission has adopted 49 C.F.R. Part 192 as the minimum safety requirements for intrastate pipeline transmission of gas subject to the Commission’s jurisdiction.  Id. § 165:20-5-21.  No other specific statewide provisions relating to the retirement of power plants, transmission lines or gas pipelines were found.

Seventeen municipal codes were reviewed.  Although most contained provisions addressing the abandonment of gas and oil wells, only four contained provisions regarding discontinued or retired distribution systems.  The Mustang code, in its provisions regarding “resubdivision,” requires that, with respect to subdivision changes, the relocation or abandonment of any utilities is the developer’s responsibility.  Mustang, Okla., Code § 106-34 (2005).  Oklahoma City ordinances provide that as an alternative to removing pipelines under any public property, right-of-way, easement, or utility reserve, a pipeline owner who has received an abandonment permit may relinquish his ownership and abandon the portion beneath any public property, right-of-way, easement, or utility reserve “by first, pumping the pipe full of mud, or material approved by the City Engineer, then properly disposing of any residue coming out of the pipe, and securely plugging each […]

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